With the start of this New Year, you may be thinking about your health a bit differently. You might intend to lose some weight, or improve some of your numbers – like blood pressure or cholesterol levels. Your goal may be overall fitness and strength.
The turn of a new year is a good time to evaluate the financial health of your farm, as well. This is the chance to step back and look at the "big picture" of the farm's financials. A financial analysis is a good starting point to identifying key numbers to target, thereby improving your farm's financial health this year.
Think of a financial analysis as a benchmark fitness test that's given to you by a financial "personal trainer" for your farm. The trainer first has to look at where you currently are. Then he can help you create and follow a plan to get you where you want to be.
In a fitness situation, the personal trainer is an expert in weight lifting, aerobic exercise, and nutrition. That trainer is able to look at your situation and your habits from the outside – comparing you with other people he knows – and make specific suggestions for improvement. Even if you're fairly healthy, he can pinpoint some areas to work on that will help make you stronger than ever.
As you work to reach your goals, your trainer meets you at the gym. He stays in contact to make sure you're working out and eating right. Sometimes, you might feel sick of that trainer, or disagree with what he says you need to do. But the trainer's job is your fitness, so he feels success when you're as healthy as possible.
Think about your farm's financial health again. What would a financial personal trainer for your farm look like? A financial personal trainer knows the outside factors that affect your business. He knows what a healthy farm balance sheet looks like. He can spot areas in your business where you can change your practices slightly to create a positive impact on your overall operation.
Your trainer feels success when you succeed – when you're able to get that loan or achieve your growth goals. What's your resolution this year to increase your farm's financial fitness?